Should we target millionaires and billionaires? After the last year in quarantine, the wealth gap has only grown more severe. There’s no doubt that there has to be some policy change to level the playing field, but wealth taxes do not work. Only 1 in 1,000 households would have to pay a wealth tax if we started one.
They work only in theory
Wealth taxes, in theory, seem like they would work. Let’s take money from people who have plenty and redistribute it. But there are several cases of countries instituting taxing the rich and watching their efforts fail. Many parts of Europe have tried wealth taxes before: Sweden, Germany and France are just a few that tried and, then, abandoned it.
Quantifying how much someone is worth
The biggest issue is finding out how much someone is worth. Which assets do you count? Billionaires have houses, yachts, airplanes, horses – You name it. You would need an extensive list of taxable assets to properly assess how much someone is worth.
Even then, the wealthy would park their money in whatever is not on the list. Only smart people become millionaires and billionaires. If boats are under the tax, they will buy hovercrafts. If horses are under the tax, they will buy cows. You get the point.
A wealth tax would drive out companies
When Sweden started a wealth tax, it was enough to push IKEA to Switzerland. If you enact this law in the United States, the wealthy will move their companies – and possibly their families – elsewhere. These losses will heavily outweigh any revenue brought in from the wealth tax.
Wealthy people move to where they don’t have to pay taxes. Why do you think Jeff Bezos and Bill Gates live in Washington State? You guessed it: no income tax. I don’t know what the solution to the wealth gap is, but I do know that it isn’t taxing the rich. What do you think?